The depressed housing market is magnifying that tension. "In an average divorce, the biggest asset is the home," says Evan Sussman, a divorce attorney in Beverly Hills, Calif. "People have lost value on on their homes, and they are unable to sell. The equity they had in the home is down."
In fact, nearly 40% of couples considering a divorce have postponed plans to split because of the economy, according to a recent survey of more than 1,000 couples by the National Marriage Project at the University of Virginia. The study also found that 12% of couples have had trouble paying a mortgage or experienced foreclosure.
Couples who are moving forward with a divorce this year in spite of market obstacles face tough choices: Keep the house and wait to sell until the market is better? Live together in the meantime? Sell now no matter what? When it comes to the house, arriving at a fair solution requires balancing financial decisions and weighing emotional pros and cons.
To help you frame the issues around divorce and real estate, here are a few questions from the experts:
1. Does it make economic sense to keep the house? Vicki Volper, a divorce mediator in Westport, Conn., says a couple needs to carefully consider whether keeping a property is a smart financial move. "Why do you need to keep the house? You may be house poor, and it doesn't make sense." If one partner ends up staying in the house, who will be responsible for the monthly expenses? Divorce arrangements can result in the non-resident half of the couple still footing the bills. "I know one case where the ex-husband mows the lawn because he doesn't want to pay for it," Volper says.
2. Are your emotions clouding the bottom line? Strong emotions, especially the fear of financial insecurity, can undermine good decision making. Susan Pease Gadoua, a licensed therapist and divorce counselor in San Rafael, Calif., says that women tend to view the housing issue through an emotional lens whereas men see it as business transaction. It can get complicated when there is "the emotion of wanting to keep the house even when it is not always the best financial decision for the bottom line."
3. Can you stand living with your ex? For exes who continue to inhabit the same house, the keys are--no surprise--communication and managing expectations. "Discuss childcare or who is watching the kids, agreements around dating and how you will continue with bank accounts," Gadoua says. "Talk about things quickly when they come up."
4. Can you afford not to sell? If the bills keep coming and a foreclosure is imminent, unloading the place may be the only choice. Sellers can avoid the damage of a foreclosure with a short sale. With the lender's consent, homeowners sell the home for less than the outstanding balance of the mortgage. (Learn more about short sales.)
5. How will you split any proceeds from the sale? You are entitled to reimbursements for capital improvements or other home investments made with marriage-era earnings, says family-law attorney Sussman. Even if you don't hold the title to a property, your sweat equity and home improvements are worth something if you are compensated in a divorce proceeding.
Catherine New is a personal and consumer finance reporter for DailyFinance.com and Aol Huffington Post.
For more information about planning your finances and divorce, see the three-part series "Heading for a Divorce?" on AOL's sister site DailyFinance.com. Part 1: First, Get Your Finances in Order
Part 2: Tally and Appraise Your Assets
Part 3: Determine Your Post-Split Expenses
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